Fed Minutes: Why Stocks Rose

Stocks rose briefly on the release of the Fed minutes, a curious move, since the initial headlines do not seem to be particularly stock-friendly: an "intense discussion on exit strategy." Halting reinvestment seen as a "modest step toward tightening."

I say not particularly stock friendly, because traders believe QE2 (quantitative easing) has been a boon to stocks and the withdrawal will be messy for the markets.

But read a little more carefully:

"the Committee's decision to discuss the appropriate strategy for normalizing the stance of policy at the current meeting did not mean that the move toward such normalization would necessarily begin soon. "

That's the key headline. It ain't happening soon.

A small group are arguing that it is time to take the economy off life support, and the big question is, can they sell assets at a price that won't flood the market?

They are going to stop reinvesting in MBSs and Treasurys first, but even here they made it clear they don't know when that will happen.

Bottom line: it still seems remote that the Fed will be raising rates any time soon, or even halting reinvestments.